How does COVID-19 affect businesses?

 

There's a lot to say there. Let me focus on a survey that my colleagues and I did earlier this month to gather exact information on the issue. There is a survey of business uncertainty. Over a two-week period around the beginning of March, we explicitly asked hundreds of businesses: “what do you expect coronavirus-related developments to affect sales revenue in 2020?"

The activity-weighted average answer returned was about negative 6%. Therefore, this is a big negative impact. But, perhaps more interestingly, from the first week of the survey to the second week (the first week is the week of March 9 and the second week is the week of March 16), the answer gets worse. Therefore, the answer for the second week is almost twice as much as for the first week. So it's more like a negative sales volume close to 12%. As a result, businesses themselves, see sales revenue and operations hit hard in 2020. In the course of the investigation, these expectations have deteriorated to a considerable extent. Therefore, even 6% is a very serious sharp recession. In less than a year of contraction, 12% is different from what we have seen in modern times. So it's bad. Of course, now no one really knows. Developments are changing with each passing day. We do not yet know how long the pandemic will last.

 At this point, we really do not yet know the contagious and deadly nature of the virus. Because we really don't have much good information about how many people have developed this disease and recovered from it. As a result, we are still in a very dark state as far as health care is concerned, which makes it very difficult to assess the final economic consequences. As a result, the crisis will have a profound impact on the labour market. You can already see some of the early waves. 

There is a surge in demand for delivery services, home delivery services, business delivery services. After the crisis, some of them will subside, but not all. On the one hand, over the past month, there may be millions of people who have figured out how to order food online. Once this hurdle is overcome, some of them will find themselves liking it, for convenience, or because people have been worried about the health effects of going to a sit-down restaurant, some of them will continue to stick with it or go to a crowded grocery store. So the shift to online buying and on-site delivery will be a huge shift, and I don't think that will change. We're doing an interview via Zoom. I can tell you that I'm sure many Calendar Meetings are full of Zoom meetings. As a result, Zoom and other similar technologies are also experiencing a huge boom. All of us are learning how to use this technology. 

There is a learning curve that is not so steep. However, you have to solve the problem yourself, both in terms of organization. Once we get over that threshold, I think we'll do more video conferencing. This is great for businesses like Zoom. But it does mean that airline travel, such as hotel stays for business reasons (possibly for tourism reasons), may decline and weaken their occupancy rates even if we overcome the crisis itself. So these are just some examples. I think we've learned, hopefully, we've learned that some of our investments in the supply chain of public health infrastructure and critical medical equipment, masks, ventilators, testing capabilities (including kits and laboratory capabilities) are looks like we may want to increase investment not only in the short term but also in the long term. Therefore, there will be a lot of such shifts. This presents an interesting point of view for policy. 

We want to implement policies in a way that promotes these shifts and encourages them, rather than slowing them down and stopping them.